Real Estate Gazette: Focus on distressed assets

Issue 25

Новини нерухомості

A very warm welcome to Issue 25 of DLA Piper’s Real Estate Gazette. The global real estate market is currently operating against a backdrop of economic uncertainty. Brexit, immigration and presidential elections in the US all combine to create an environment in which you would not normally expect real estate to prosper, but historically low interest rates and the volatility of equity markets continue to push money into real estate.

This issue of the Gazette focuses, therefore, on the legal aspects of investments in distressed real estate.

A selection of articles is below, alternatively you can download the complete Real Estate Gazette in two formats:

в цьому питанні

Occasionally, it may prove difficult for owners of Danish industrial or office properties to find a suitable, long-term and reliable tenant. However, the demand in Denmark for residential real estate, especially in the urban areas in and around Copenhagen, is as high as before the financial crisis.

The acquisition of non-performing loans (NPLs) secured by real estate can be attractive. Recently, we have seen a considerable uptake in multi-jurisdictional portfolio transactions. Such transactions are complex and require a considerable amount of due diligence for both vendors and investors.

In the Netherlands (and other European countries), selling and buying (real estate) non-performing loans (NPLs) portfolios is on the increase. The first significant Dutch NPL portfolio, known as Project Lucas, was sold in September 2015 (for €420 million). Currently Lone Star Funds is buying Propertize, a “bad bank” with loans of more than €4 billion. Additionally, Dutch Rabobank has announced its intention to reduce its entire loan portfolio by approximately €100 billion by 2016/17. These circumstances have led to a growing enthusiasm from (foreign) investors for investing in NPLs in the Netherlands.

Any discussion of distressed assets will, almost certainly, feature Spain. In a country where house ownership is around 80 per cent, and in which more homes were being built each year than in Germany, France and England put together, the global financial crisis decimated the real estate development market and increased the non-performing loans (NPLs) ratio from a stable 1 per cent pre-crisis to more than 10 per cent in 2012. This perfect storm saw the Spanish banks holding more than €500 billion of distressed assets at the peak of the crisis.

Political and economic uncertainty in the aftermath of the referendum result in the UK has dampened sentiment on the high street and hit consumer confidence. According to the National Institute of Economic and Research, there is an "even" chance of Britain falling into recession by the end of next year and the Bank of England has significantly reduced its growth forecast for 2017.

At this time of year, the travel media entice us with articles about little known holiday locales - undiscovered islands, secluded villages and forgotten cities. All beckon holidaymakers with the promise of charm, authenticity, and most of all, real value for money. They are holiday hidden gems. As investors in non-performing loans (NPLs) also scour the globe seeking new locales which offer real value for money, Ukraine may prove to be an NPL investment hidden gem.